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S.F. No. 720 - Reinsurance - Third Engrossment
Author: Senator Gary H. Dahms
Prepared By: Christopher B. Stang, Senate Counsel (651/296-0539)
Date: March 10, 2017


This bill establishes a reinsurance program for the individual market to be administered by the Minnesota Comprehensive Health Association ("MCHA").

Section 1 adds two directors appointed by the commissioner of human services to the MCHA Board.

Section 2 establishes definitions for purposes of the reinsurance program.

Section 3 requires the Commissioner of Commerce to require health carriers to calculate the health premium amount that would be charged had the reinsurance program not been established, and submit this information as part of the rate filing.

Section 4, subdivision 1, establishes MCHA as the entity to administer the state reinsurance program.

Subdivision 2 establishes a timetable for the MCHA Board to propose to the Commissioner of Commerce for approval or rejection the payment parameters. For plan year 2018 the attachment point is $45,000, the reinsurance cap is set at $250,000, and the coinsurance rate is 80%.

Subdivision 3 sets forth how the payment parameters are applied to calculate security plan payments.

Subdivision 4 establishes the process for a health carrier to request security plan payments. MCHA must be provided access to the data within a specified dedicated data environment. Record keeping and audit requirements are set forth.

Subdivision 5 requires the association to notify eligible health carriers of premium security plan payments to be made by June 30 of the year following the applicable plan year.  If funding for the plan is not sufficient, the board must adopt revised payment parameters within available funding.

Subdivision 6 requires the association to make the plan payments by August 15 of the year following the applicable plan year.

Subdivision 7 classifies data of the association under this section as private data on individuals or nonpublic data.

Section 5 sets forth accounting and auditing requirements for the reinsurance program. The legislative auditor has authority to audit the program. An independent external audit is also required for each plan year.

Section 6 establishes a reinsurance fund account in the special revenue fund.  Funds in the account are appropriated to the commissioner for grants to MCHA for the reinsurance program.  Requires the association to fund the program in the following order, federal funds, excess funds of the association, state funds from the health care access fund, and state funds from the general fund.

Section 7 requires the Commissioner of Commerce to apply for a waiver to the Secretary of HHS for the sole purpose of implementing the premium security plan in a manner that maximizes federal funding. Specifies what must be included in the waiver application.

Section 8 transfers $180,000,000 in each year of the 2018-2019 biennium from the health care access fund to the reinsurance fund account. Transfers $120,000,000 in each year of the 2018-2019 biennium from the budget reserve account to the general fund, and then from the general fund to the reinsurance fund account.

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